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how far can I go before identifing a lender

I am working on a loan and have received several GFEs from several brokers. should I work with all of them until I receive the final rate offer and lock the best rate or work with the one who has the best GFE? I do not want to the rest to spend too much time if I do not use their service. Thanks
  • June 05 2009 - San Marcos
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Answers (4)

Personally, I would stick with someone local.  You can talk to 25 lenders and get 25 different answers.

I always suggest to pick two or three, and then go with whomever you feel the most comfortable with after speaking with them.

Yes, we all do work hard for our business, so your candor is appreciated.

Best of Luck.....rates are very erratic so consider locking once you have made a decision.
  • June 05 2009
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closing and title insurance would depend on the settlement agent you choose, not on the lender you choose.
  • June 05 2009
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smarkma,

You need to make sure that you are getting the lowest overall cost of borrowing, not just the best GFE.

Some items to consider:

*  How long do you plan on being in this house

*  How long before you need to refinance again (lower rate, cash out for home improvement, debt consilidation, start college savings account, etc.)

The typical mortgage is refinanced every 3 - 5 years, and the typical homeowner moves every 5 -7 years.

Make sure to compare just the closing costs, and not the pre-paids.  You need to do this to ensure that if you are dealing with an unexperienced loan officer they don't list a smaller amount than necessary in your escrow account.  So, don't compare:

*  Tax reserve
Homeowner's Insurance Reserve
*  Aggregate Escrow
* Odd Days interest

The first three will be the same, the last would only be different, based on the interest rate.

So, what does that leave to compare:

* Loan Origination
* Loan Discount
* Broker Fee
* Processing Fee
* Underwriting Fee
* Application Fee
* Admin Fee
* Closing
* Title Insurance

Ask each if they are willing to guarantee that they will come in at or below the quoted Good Faith Estimate.

Choose the best one for your situation and move forward.  Most lenders will not lock your loan in until they have taken a full application and sometimes even ordered an appraisal.

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  • June 05 2009
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At some point you will need to place the loan in process and have an appraisal ordered.  Yoiu should choose a lender prior to having an appraisal ordered. 

Be careful making your decision solely on the merits of a GFE.  They are only as acccurate as the LO makes them.  It is not un heard of for an LO to make the GFE look great in order to earn your business, only to have things change down the road.  Choose the Loan officer you are most comfortable with not the GFE that's the lowest.  IF they are telling you everything you want to hear odds are they are not the one you should deal with!
  • June 05 2009
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